Dear Fellow Shareholders: At October 31, 2009,the audited net asset value attributedto the127,537,907shares outstanding of the Third Avenue Value Fund (“TAVF”, “Third Avenue”, or the“Fund”) was $44.60 per share. This compares with anunaudited net asset value at July 31, 2009 of $42.14 pershare and an audited net asset value, adjusted for asubsequent distribution, of $34.98per share at October31, 2008. AtNovember27, 2009, the unaudited net assetvalue was $44.64per share.
QUARTERLY ACTIVITYNumber of SharesNew PositionAcquired
500 sharesFleetwood Homes Inc. Common Stock(“Fleetwood Common”)
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Principal Amount orNumber of SharesPositions Increased
$30,000,000CIT Group Senior Unsecured Notes(“CIT Notes”)5,017,952 sharesSycamore Networks Common Stock(“Sycamore Common”)
Positions Decreased
120,000 sharesChong Hing Bank LTDCommon Stock(“Chong Hing Common”)$59,020,000Forest City EnterprisesSenior Unsecured Notes(“Forest City Seniors”)$66,000,000Nortel Network Senior UnsecuredDebentures (“Nortel Seniors”)14,083,385 sharesMBIA Inc. Common Stock(“MBIA Common”)
PositionEliminated
$86,654,000GMAC Senior Unsecured Notes(“GMAC Seniors”)
The several credit instruments sales – Forest City Seniors,Nortel Seniors and GMAC Seniors – all resulted in therealization of substantial profits for TAVF. In the cases of the Forest City Seniors and the GMAC Seniors, these weremostly acquired at yields to maturity of 30% to over 50%. Analysis indicated that both instruments were highly likely to remain performing loans as proved to be the case. Thepositions were sold at prices around, or better than, a 12%yield to maturity. Note that the lower the yield to maturity is, the greater the dollar market price for a specific creditinstrument. The Nortel Seniors are participating in whatamounts to the liquidation of Nortel after the sale of all its
Third Avenue Value Fund
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* Portfolio holdings are subject to change without notice. The following is a list of Third Avenue Value Fund’s 10 largest issuers,and the percentage of the total net assets each represented, as of October 31, 2009: Henderson Land Development Co., Ltd.,14.86%; Cheung Kong Holdings, 12.01%; Toyota Industries Corp., 8.85%; Posco (ADR), 6.28%; Wheelock & Co., Ltd.,4.92%; Wharf Holdings, Ltd., 4.61%; Nabors Industries, Ltd., 4.06%; Brookfield Asset Management, Inc., 3.67%; Investor AB,3.22%;and Covanta Holding Corp., 2.66%.
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